Think, choose and invest
Buying a house is one of the most important decisions in citizen's life. The acquisition of a property may be for your own use or may be seen as a good investment. As far as profitability is concerned in the residential segment in prime areas, it can vary between 4% and 5%.
The saying "New year, new life" already puts it out there; one way to take this expression to the word may be by investing in a new home, but in the current situation we may revisit the saying, changing it to:" Covid-19, new life".
There are, however, some factors that must be taken into consideration when moving on to buy a house, so as to be able to save a few more euros and not run the risk of running into debt. On the other hand, the purchase of a house can also be a good source of income. Learn how to analyse all the aspects necessary to make the best choice for you. I advise you to:
Think about the purchase price
If you have a very low purchase budget, search for information and only then choose. One of the ways to find houses at lower prices is in the auctions carried out by the tax authorities, in properties taken by insolvency or bank repossessions. If you choose to buy more than one, be aware that there are advantageous financing conditions, which in some cases can be up to 100% finance. However, these properties may be in need of work or have other conditions that require further analysis. Above all, please inform yourself before buying.
If your decision is to buy a house you can start saving in advance to get a good down payment. This will make it easier for you to obtain financing and thus pay back the loan in less time. With this measure you will also be able to pay lower installments, as well as save on interest.
Don't take a bigger bite than you can chew
Before moving on to buying a house, review your monthly budget and make an account of your monthly expenses, so that you know how much you can spare for the loan. Only buy the house if it is possible, to avoid unnecessary problems in the future.
Apply the same scenario applies when choosing a house as you do when doing a relation of your monthly expenses. Do not buy a house that you cannot afford or that is too big for your needs. Opt for a space that is suitable for your household and that will not break your bank in the future.
When choosing a house
After putting all your ducks in a row and realizing that it is feasible to purchase a house, it is time to choose the house. Choose Casaibéria Mediação Imobiliária, which can help you find the property you want and also help you compare the conditions of bank financing, which may prove to be more advantageous for you.
The location of the property may be beneficial when looking to save and invest in the purchase of a house, so I advise to look for areas where supply is lower than demand, i.e. where prices during the crisis have not dropped more than 10%.
Considering that the purchase is made from an investment perspective, the yields (profit margins) which, as a rule, "are associated with small amounts, which are never less than 200 thousand euros", making it "difficult to find investments in direct real estate below this value", When comparing the weight of profit and savings, it is necessary to "try to understand, for example, what rent will generate an apartment of 100 thousand euros. If you get an annual rent of one thousand euros you are making a bad investment, because there are alternative investments that give you more income", however, "if you get a 10% return you are making a great investment, because the return doubles". This is because "the typical return on residential investment is between 4% and 5% in prime zones. If you get a return above that, you're clearly doing a good deal."
Another analysis you should do is "to understand whether you are buying, in terms of square meters, below or above the price of the area. If it's above this is a bad deal, unless that apartment has some distinguishing feature, like a garden".
As mentioned above, the real estate agent can help in an investment more suited to your financial and profitability interests. One of the cases is Insolvency, where you can buy and invest in a type of property or properties at a lower cost than the market values, because after this Covid-19 Crisis, there may be more offer of properties from insolvency, providing an ideal time to invest.
Understand when to make a good investment
The purchase by bidding will have a higher return than the Bank, where the real estate at auction, coming from insolvency and seizures, can and are already being purchased on the spot. Regardless of Covid-19, this business continues to attract many Portuguese and, when assets of great value appear, it also attracts foreigners and investment funds. The objectives are various, from purchase for second homes, rehabilitation for sale or rent and tourism. The return of investment to the sector will inflate prices. The identities confirm that the Portuguese are "applying their savings in real estate assets" and "seeking public auctions to make these investments", in an attempt to obtain higher returns compared to what the banks offer today. In other words, "It's a balancing process. The banks take fewer deposits, but recover credits".
The Order of Solicitors and Enforcement Agents (OSAE), leads the number of investors to "believe that the market has gone from the normal speculator to the investor, people with a rapid capacity for debt or own funds". There has been "magnificent growth, above all expectations". According to LeiloSoc, it put 1200 properties on the market last year, with a total value of around 20 million euros. The greatest share (85%) was bought by Portuguese. Currently, the portfolios no longer have toxic assets, however 60% relate to insolvency of families and 40% to companies, where the trend is to reverse. A few weeks ago, LeiloSoc promoted an auction, which assets increased by 30%. "People are willing to buy". Sales to foreigners continue to exist, but "these are sales of premium real estate, where a group of investors is invited to analyze the assets that are usually buildings with tourist or commercial development, which are in insolvency process".
In the previous year there were 56,573 bids, resulting in sales of 482 million euros.
For Luís Lima, president of the real estate association APEMIP, "the auctions are a phenomenon of the time of crisis". He considers that "the profile of the buyer has changed, it is someone who is looking for a good deal".
There's a health crisis at the moment, but it's not all bad news. In fact, the number of individual insolvencies has fallen and the number of companies has increased, so there may be the possibility of good investments in the future.
Text: José Costa